RESIDENTIAL - If the property is in the "restricted zone" (within 50 km/31 miles of the Mexican coast or within 100 km/62
miles of international borders), non-Mexican citizens cannot "directly" own it; it must be purchased through a Mexican 50 year renewable
bank trust (fideicomiso).

The risks related to the timing of entering the Mexican Trust are:

No Escrow (currently most common): "Offer" Contract/ Promissory Note and Deposits are paid to Seller outside of any
escrow. Documents are typically not registered before a Notary; creates no recorded right against 3rd parties (unless
registered before a Notary). There is the risk of intervening liens and other interests on the property until you get a
recorded, insurable interest in a trust. There is no recourse against the property (only lawsuit against Seller, who
may become bankrupt) if clear title does not ultimately transfer to Trust.

Deed into Trust once FULL purchase price is paid and Seller has met other requirements. Sometimes this takes a period
of years to occur, because of time needed to pay off full purchase and time to complete Seller legal requirements
(Declaration of Condominium).

Escrow (few Sellers offer): Establish Escrow along with "Conditional Deposit Agreement" before Notary and all Deposits into
Escrow (typically US Escrow). You can get your money back if a clear title does not ultimately transfer into Trust
(motivates Seller to get you to Trust so that they can receive funds from escrow). Contract before Notary gives rights
against certain subsequent 3rd party interests.

Final Deed into Trust before Mexican Notary once FULL price paid.

Depending on the purpose of your purchase, you may be able to avoid the trust structure and purchase the property directly through a
Mexican legal entity that you control. Consult your attorney. General steps are:

Set up a Mexican entity (generally requires 2 members – can be individuals or U.S. entities)

Need to state in purposes that will operate as a business (not for personal residential use). In some cases, rental
business of property may qualify.

ALWAYS perform due diligence (homework!) on target property:

Real Estate Agent - locating property/negotiation

Attorney – legal due diligence on status of property and proposed contracts

Appraiser – value of property, property information

Financing/Mortgage – secured by the Mexican property alone, or cross-collateralized by US assets?

Talk to Title Insurance company regarding insurance and escrow services available

Foreigners may freely purchase land for development on the same basis as a Mexican national outside of the restricted zone,
provided they give a "calvo clause" declaration to the Foreign Ministry that they will consider themselves as nationals with
respect to the property, and not invoke the protection of their foreign government.

Foreigners may freely purchase land for development in the "restricted zone" through the 50 year renewable trust mechanism
and by submission to the "calvo clause" described above if the property is for residential purposes.

If the property is not for residential purposes, foreigners may, on the same basis, purchase land in the restricted zone
outside of a Mexican trust. See your attorney regarding purposes.

Zoning and planning is required on state and municipal levels and encompasses sanitation, planning, zoning, commercial,
residential and industrial use compliance.

Once land use licenses are received, approvals from the Department of Urban Infrastructure and Environment, the Water and
Drainage Connections Department and the Federal Electricity Commission are required, and such entities will enter a formal
agreement specifying times and obligations to complete the subdivision.

Certain portions of the property must be donated to common areas or public uses (green belts or schools).

Get a clear estimate prior to closing from the Notary Public or Title Company handling closing.
The following is used for example purposes only, and does not reflect actual amounts or precentages:

Appraisal Fees-This fee depends on the value of the property. In addition, the rate varies from state to state. Generally between $100 and $500.

Bank trust fees - $1,000 (depends on value)

Notario Publico Fees - Generally 2% to 3% of appraised value of the home. Some notaries will work on a flat fee basis.

Deed Recording Fees-Varies by location.

Transfer Taxes - This Buyer fee is generally 2% to 3% of higher of the bank value, sales price or the property tax assessed value.Property Taxes (predial) Property taxes in Mexico vary, but are generally quite low compared to property taxes in the United States.

It depends on how you contract. If you are not careful, you may have to pay Mexican capital gains taxes on the increase in value
between the time you sign your first offer contract and the time you enter into your first document recorded before a Mexican notary
public.

Also, beware of the Seller who wants to "negotiate" reporting to tax authorities a sale price that is different from the actual
appraised value of the property. This may be done to avoid capital gains taxes for the Seller, at the expense of increasing the
Buyer's future tax liability for an increased capital gain because Buyer has a lower initial basis.

In some cases and for some proper purposes, yes. Consult your US and Mexican attorneys and tax professionals to discuss the
legal ramifications of ownership through an LLC, including: US securities law issues, limiting of liability if the property is used for
rental purposes, fractional use/ownership allocated through an LLC among multiple US owners, "flow-through" tax effects, and other
issues.

No. The trust structure is an established Mexican legal mechanism with all major national Mexican banks. If you use a
Mexican national "go-between", the Mexican national actually owns the property and may determine, in the future, not to respect your
unrecorded rights. Moreover, the "go-between's" heirs will likely not respect your interest in the event the "go-between" dies.

The trust terms will control what happens. To avoid risks and expensive legal proceedings after you die, it is prudent to work
with your legal counsel and the bank trust officials to plan ahead to make sure that the trust transfers to alternate beneficiaries in
the event of your death. If you do not, your heirs may have to spend substantial costs to obtain orders from a U.S. probate court,
and present those to a Mexican court to obtain orders directing the bank trustee to transfer the trust into the name of your heirs.

If you purchased in a Mexican development of 6 or greater subdivided units, and if the project is marketed to Arizona residents
(regardless of where they sign), then the Seller/Developer must have a Disclosure Report (Public Report) on file in Arizona and provide
you with a copy.